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SBHD: All eyes are turned to National Heritage Secretary Stephen Dorrell as he struggles to find a panacea for the cross-media ownership grievances, but will a government nervously facing a General Election deregulate and be damned, or fudge a compromise which pleases no one?

For a brief moment in November, the media world held its breath, more in hope than expectation, that the dumping of Post Office privatisation from the Queen’s Speech would open the door to fresh broadcasting legislation erasing the almost universal grievances felt by the industry after the 1990 Act.

The hopes were dashed. The Queen’s lips did not move on the issue. The gap left by the ideological U-turn on the Post Office was left empty. In truth, the hopes were shattered much earlier when, in the summer, the Cabinet’s “L” Committee, which decides the content of the Queen’s Speech, ignored pleas for fresh legislation. Insiders believe the issue is seen as too politically sensitive in the run up to a General Election.

However, with the absence of a new broadcasting bill, the long-awaited review of cross-media ownership has become the focus for all media lobbying. All the different interests will be trying to piggyback onto the cross-media review to convince the Department of National Heritage (DNH) to take action on their particular grievances.

Channel 4’s funding formula, by which it will be forced to give the ITV companies ú55m this year, and privacy are just two other issues which could be wrapped into the review. Announced by the then National Heritage Secretary Peter Brooke 12 months ago, submissions were made by interested parties and a report was prepared by civil servants and delivered to Whitehall last summer where it has been sitting ever since.

The cross-media ownership committee which compiled the report has been disbanded and its co-ordinator has been moved to Paris. The sense of drift has become palpable but with this week’s re-opening of Parliament, Brooke’s low-profile successor Stephen Dorrell will again come under pressure to reduce the restrictions on newspaper ownership of the ITV companies.

He has studied it “thoroughly”, according to DNH insiders, but “will not be rushed into making any decision”. The review was triggered by the relaxation of ITV ownership rules, which allowed last year’s flurry of television mergers.

The main gripe for the non-News Corporation newspaper companies is the existing 20 per cent ceiling on its ownership of the ITV companies. Co-ordinated through the British Media Interest Group (BMIG), Associated Newspapers, Pearson, the Guardian Media Group and the Telegraph are pleading that Rupert Murdoch’s News Corporation has an unfair advantage because there are no similar limits on the ownership of satellite or cable television.

News Corporation denies this but admits to concern that Dorrell may be forced to include it in the regulatory framework. The 20 per cent ceiling has been rendered unsustainable by last year’s television mergers, which now means that three companies account for 70 per cent of total television advertising sales.

The BMIG has become increasingly frustrated at DNH lethargy. “It is disappointed that Dorrell has taken so long to make a decision, that there was no reference in the Queen’s Speech and feels the delay is because of political sensitivity,” says one BMIG insider. “But any relaxation would be welcomed and the group would see it as progress.”

The group will make a second presentation to the DNH later this month with new research on how to measure media ownership – a consistent sticking point. “I believe the Government is nervous,” says Guardian Media Group chairman Harry Roche, “but equally, I believe it accepts that the situation cannot be ignored. In the past month, the DNH has again become more active on the review.”

The delays have been explained away by claiming that Dorrell needed time to master his brief, but there has also been a degree of political in-fighting between the Departments of Trade and Industry and the DNH as they compete for control of the broadcast area.

Dorrell is under pressure to assert himself and strengthen the DNH’s grip on broadcasting policy. The cross-media review is his best opportunity to stamp that claim but he could be hamstrung by political considerations.

The DNH has three clear options for publishing the conclusions of the report: A Green Paper which would open the way to more consultation; go down the more determined route of a White Paper which would sit on its hands and do nothing. The final option is not seen as politically expedient and there is a growing consensus that Dorrell will be forced to compromise rather than provoke a fight with any part of the media.

The most likely outcome is a relaxation of the ceiling to a maximum 30 per cent stake which would be within Stock Exchange rules and would not require primary legislation. Estimated time of arrival for the report, which was expected last summer, is now March.

“He is, by instinct, a deregulator,” says one media analyst on Dorrell. “But whether his voice will be heard in a Cabinet nervous about a battle with the media so close to an election is the question which could decide the outcome of the review.

“He will go for limited deregulation, publicly aided and abetted by threatened referrals to the Monopolies & Mergers Commission,” predicts the analyst, an adviser to some of the ITV players. “It was difficult to make a rational business case for the limits to be continued on cross-ownership within the ITV network and so logically it is difficult to justify restricting greater ownership of the ITV companies by newspaper groups.

“Economically, further media concentration is seen as the only way to compete with European players but that raises all sorts of political and cultural questions. As a consumer, I would be rather happier if MMC legislation had been used to prevent cartel pricing in the past, but it has failed and there is no suggestion it will actually work in this area.”

There is widespread support for a relaxation of restrictions on the newspaper ceiling – everywhere except the ITV network, that is. Among the supporters of liberalisation is the ad industry but it, too, has concerns about concentration of sales across different media and these have been communicated to the DNH.

“We are as interested in the ownership of the selling mechanisms of media as the ownership of the media itself,” says the chairman of the IPA broadcasting committee Adrian Birchall. “It is not conducive to targeted marketing to have to use media that you do not want to use, with the media that you do, simply to achieve deals.”

Dorrell’s political ambitions will also come into play. He has already been criticised for inertia in a job where media policy offers one of the few opportunities for him to raise his profile as a potential prime ministerial candidate and antidote to the Tory right.

Many observers believe it is these calculations which are being done rather than those about 20 or 30 per cent ceilings. The Government has backed itself into a corner where it cannot satisfy all parties and has particularly angered the press.

The state of uncertainty needs to be resolved so that media companies can plan long-term investments in technology, radio, television and publishing. The newspapers offer cash reserves but the constipated progress of the cross-media review, and the Government’s political nervousness, indicate that when it arrives it will be a severely compromised fudge that will please nobody.